IL&FS Investment Managers, India’s only listed private equity fund, has acquired 9.4% shareholding in an Indiabulls’ firm that is developing the 8.3-acre Bharat Mills at Worli in south central Mumbai. IL&FS bought the stake for Rs.200 crore, valuing the project at Rs.2,126 crore.
The pure equity deal assumes significance in the backdrop of most private equity deals into realty sector taking route of structured and mezzanine finance given the sluggish investment climate in realty sector.
IL&FS will undertake the investment through its second realty fund worth $895 million, and the transaction will mark total deployment of this fund raised in 2008.
“The project is a unique asset for us in terms of size and location and will fetch superior returns for us and our new partner,” said Vipul Bansal, Chief Executive Officer, Indiabulls Real Estate while confirming the transaction. However, he declined to provide further details.
IL&FS officials declined to comment.
In August 2010, the listed realty developer had acquired Bharat Mills for Rs.1,580 crore by outbidding Lodha Developers by Rs.2 crore in an e-auction conducted by National Textiles Corporation. The transaction values the proposed high-end residential and commercial project on this land parcel at over Rs.2,100 crore, nearly 35% premium to the price paid by the developer in 2010.
The valuation of the project through this transaction also defies the current and future oversupply estimated for central Mumbai including Lower Parel, Worli and Prabhdevi. Indiabulls Real Estate itself has developed and is in the process of constructing total 3 million sq ft at Jupiter Mills and Elphinstone Mills at Lower Parel.
Indiabulls Infraestate, the subsidiary undertaking the project, is planning to develop seven-star managed private residences along with a commercial project.
